Proper governance of companies is becoming as crucial to the world economy as proper governing of countries. Business corporations are adopting good corporate governance practices in order to gain access to assured markets and capital, necessary for their sustainable growth. The navratna PSUs have substantial locked-up potential and can give better return if they are managed professionally. It was, therefore, considered appropriate to take up the navratna PSUs as a group to investigate the role of the Independent Directors towards better corporate governance.
The objectives of the study were to evaluate the process of selection and training of the Ids, assess the performance of IDs in the Boardroom and Audit Committees, evaluate their contributions to strategic planning, risk management, corporate ethics and corporate social responsibility, make recommendations toenhance theircompetenceandimprove theircontributions tothe Board functions in the navratna PSUs.
The investigations were based upon six research questions concerning the selection and training of the IDs, their performance in the Boardroom, contribution to strategic management, corporate ethics and corporate social responsibility and measures to enhance their independence and competence for better corporate governance in the navratna companies.
The IDs are held in high esteem in the navratna PSUs. They have made significant contributions to these public enterprises. The most significant achievement of the IDs has been the enhancement of independence and competence of the Board to take objective decisions and withstand pressures from external sources of power.
There is full justification to continue with the induction of IDs into the Boardroom of the navratna PSUs. The contributions of the IDs can be enhanced by improving the process of selection, training and level of compensation. Full autonomy of the Board and greater involvement of IDs in the Board process like initiation of Board agendas by them, provision of outside professional advice to the IDs can also make the IDs more effective in the Boardroom. On the whole, despite limitations and shortcomings, the IDs have proved to be assets in enhancing the standards of corporate governance of the navratna PSUs.
